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Loan Modifications are going through an interesting stage. Enormous efforts are being made to save homes from foreclosure, and while some results seem to be made, millions are still heading straight to a foreclosure. The government has increased the pressure on loan servicers and lender, and relaxed the requirements for a HAMP modification. What have been the results? Is there any good news to share? This short article will look into the good news, and the bad, of loan modifications at the end of March 2010, and try and separate the spin (a.k.a propaganda) from the real news.

The Spin: There has been a 45% increase in the number of permanent loan modifications in February 2010, according to HAMP.

The Truth: The total number of permanent loan modifications is still only around 170,000 loan modifications.

The Spin: Homeowners that receive a loan modification will enjoy much lower mortgage payments because they are granted a fixed 2% interest rate for five years.

The Truth: This is true, payments can be lower for borrowers that receive a modification. Unfortunately there are still more than 830,000 homeowners that are awaiting a decision on their temporary loan modification, and are languishing in loan modification limbo.

The Spin: The figures look worse than they are because there are over 91,000 troubled borrowers that have been approved for a permanent modification, but has not signed the final paperwork yet.

The Truth: Granted, however there were also 90,000 trial loan mods cancelled.

The Spin: More than 1.35 million trial loan mods have been extended, which includes over a million HAMP modifications.

The Truth: The vast majority of these mods are trial loan modifications, and in any case, only represent a 35% of the troubled homeowners the Obama administration predicted the plan would help. It must also be noted that half a million of these troubled homeowners could easily lose their trial modifications. A even more worrying fact is that more than half a million of borrowers on a trial modification have already made the three monthly payments. Why? Apparently many will not receive the permanent modification because lenders have finally decided their income is too high, or too low, to justify a modification. The benchmark for qualifying, or not, is set in such a way that having just a few hundred dollars more or less in your banking account can make the difference between approval or denial.

This had created in many the feeling that trial loans are often just a way for banks to squeeze a few months mortgage payments out borrowers that either had no hope of qualifying or the bank feels they are hopeless cases that will most likely re-default whatever measures are taken.

In conclusion, and to be fair, there has been some progress in the last months. However, this is too little, too late for most homeowners. However, a new problem now arises. Now a new wave of unemployed troubled homeowners with prime mortgages is hitting the housing crisis shore. It is unclear what solution loan modifications can provide when the mortgage already has low interest rates and a long tenure.

Related posts:

1. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
2. Loan Modifications, The Truth Behind The Spin
3. Loan Modifications Cannot Stop the Rise in Foreclosures

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1. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
2. Loan Modifications, The Truth Behind The Spin
3. Loan Modifications Cannot Stop the Rise in Foreclosures

Loan Modifications can be a way to save your home from an imminent foreclosure. It will also affect your credit score, and this could affect your chances of getting another loan or when applying for a job. This makes many people think twice before applying for a loan modification. The truth is that you could end up without being accepted for a loan modification but still suffer a drop on your credit score. There is also the time wasted applying and waiting for a response. Some troubled homeowners automatically assume they are not eligible for such a modification. A good way to make sure you are even eligible for a loan modification under the HAMP program is to visit http://makinghomeaffordable.gov/modification_eligibility.html and see if you pass the program’s requirements. This will help you save time and your credit rating without asking for an outright modification. The requirements are straightforward and will give you a clear understanding of your position. This questionnaire will also help you get used to the kind of question you will be asked if you go ahead with the modification. Use it as a trial run that has no negative consequences on your record. The questionnaire is set as a test that tells you if you are eligible for a HAMP modification based on the information you provide. What questions are asked? There are only 5 questions that determine your eligibility. 1) Is your home your primary residence? 2) How big is your mortgage? The key question here is if it is below the $729,750 mark, the maximum mortgage size to fall in the HAMP program. 3) Are you struggling with making payments toward your mortgage? You guessed! If you say no here you will not qualify. I tried! 4) Was your mortgage contracted before 2009? This is also a key question as all loans after this date do not qualify. 5) The final question relates to your debt to income ratio. That is how much money you owe in relation to how much you make. The key question is if it is higher than 31%. If your debt to income ratio is not higher than 31% HAMP cannot help you. You will have to find some other kind of alternative. Put simply you must answer yes to all five questions to be eligible. If you knew anything about the HAMP program you probably did not get much out of that questionnaire. However, after you determine if you are eligible for a loan modification you can download an RMA form at http://makinghomeaffordable.gov/docs/RMA%20Interactive%20-%20Updated%2011.10.09.pdf . This form will help you collect the information you need to apply for a modification. You can then contact a free counselor and ask for advice on your particular case. Unfortunately qualifying for a HAMP loan modification is the easy part. The hard part is getting your lender or servicer to approve it. There are also grey areas when applying for a loan modification, which makes the questionnaire we looked at above a little bit of an oversimplification.  However, it is a great place to start. As you can see the process is not that difficult, you can do it yourself and save yourself a small fortune instead of spending your last dime on a foreclosure rescue company. Nevertheless, you must accept that applying for a loan mod is going to be complicated and require a lot of your time and patience. If you do not have either you might still want to use a paid company.

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1. Loan Modifications Back To Basics
2. Am I Eligible for FHA Secure?
3. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories

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1. Loan Modifications Back To Basics
2. Am I Eligible for FHA Secure?
3. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories

The HAMP program has finally started to get some momentum and provide a substantial amount of troubled homeowners with a way out of foreclosure. Unfortunately, this help seems to be too little, too slow, and too late. However, one must accept that steps are being made and that although not all targets have been met, significant progress is finally occurring.

Let’s look at the hard data.

-       After over a year since the program started 168,000 households now have permanently modified mortgage. This represents an increase of over 50,000 from January 2010 and 100,000 from December.

-       There 92,000 trial modifications in the final stages before a permanent modification. According to Treasury the average saving for each homeowner is around $500.

This is good news, and it is certainly a help to those that have been fortunate enough to benefit from it. However, the truth is that it is a drop in the bucket when compared to the 6 million + troubled homeowners that are behind in their payments and are at risk of foreclosing on their mortgages.

When the program started it was hailed as the most aggressive plan the Government was enacting to control the housing crisis. Over a year later only a million people have entered the program, a far cry from the four million households the program set out to help.

A words batter has started over these claims. The Treasury is now claiming the goal was to provide help to 4 million homeowners not make sure they actually got it. If you accept this interpretation, HAMP is between 35 to 45 percent of the way to achieving its goal. Of course, critics claim that the Treasury is simply moving the goalposts.

What is even more worrying is how the borrowers that enter the program are being treated. Valparaiso University School of Law carried out some interesting research on the HAMP program and discovered that although 66% of all borrowers in the trial stage made all their payments, less than 25% have received a permanent modification to their mortgage. The reason for this is lack of paperwork and the loan modification limbo created by the complex and lengthy red tape.

Nevertheless, the Government remains confident, and a Treasury Department spokeswoman has claimed the rate of loan modification completions will rise in the next few months.

Another scary fact is that the number of people entering the program is actually slowing down. In February 73,000 signed up, which represents only half the number of homeowners that did so in October and November.

In conclusion, although the Government is starting to make a substantial dent in the number of homeowners it is offering help to; it is a far cry from the objectives the program set out to meet.

Related posts:

1. Treasury Moves The Goal Posts of HAMP and Lowers Expectations for the Loan Modification Program.
2. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
3. Loan Modifications Are Going To Be Simpler, What Do You Need Now?

Related posts:

1. Treasury Moves The Goal Posts of HAMP and Lowers Expectations for the Loan Modification Program.
2. Loan Modifications Latest Figures, Limbo, Trial Purgatory And Other Horror Stories
3. Loan Modifications Are Going To Be Simpler, What Do You Need Now?

Preparing mortgage aid programs and loan modification schemes is not easy. Not as hard as struggling with a mortgage you can’t afford and trying to get a loan modification from heartless corporations that simply want to milk the proverbial consumer cow, so I am not expecting any sympathy, but nevertheless it is hard.
The Government has provided a whole variety of programs in order to deal with the different type of struggling borrowers, or have they? I actually believe the government has a vested interest in making loan modifications work, they want to get reelected and people having a roof under which to live is a big part of what makes us feel a government is looking after our interests.

However there is an alternative way of looking at things. Loan modifications are designed so that only after an initial loan modification trial where the borrower proves he can pay the modified monthly payments faithfully does the full loan modification come into action.
This could seem fair and logical. Only after a show of good faith should borrowers get a second chance. The only catch with this reasoning is that banks do not have to show similar evidence of good faith.

Another problem with the loan modification’s program is that while borrowers are asked to pay for their mortgage religiously in the loan trial, the foreclosure process continues unfazed. This is very disturbing. To think that a borrower is lulled into a false sense of security while notices of default turn into repossessions and ultimately evictions while the borrower is sweating blood in order to pay the mortgage on a house that very well maybe hopelessly underwater is tragic.

Some would say that the whole loan modification program can be used by banks to take a failing loan into the process and with Washington’s blessing milk a final three months of payments while offering nothing more than an empty promise.

Although there very well might be some truth in these words I think we might be forgetting the cost of processing a loan modification for a bank, the paperwork, the time and the paperwork involved make loan modifications expensive. In fact many believe that foreclosures are actually cheaper than loan modifications for banks. It would be interesting to know if this is still the case if we put three extra mortgage payments into the equation.

Before we get too emotional, many of us get ourselves into trouble by over borrowing and over spending on overprized homes. Foreclosure could in these circumstances be the reasonable route.

Whatever may be the case how sad that loan modifications could, by error or design, end up being simply a way of milking struggling borrowers from an extra three months of payments before foreclosing their homes.

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Loan Modifications are the way forward in the opinion of the Obama Administration. A number of federal programs have been placed and are ready to welcome droves of homeowners that need to modify their loans.

However many question the wisdom of loan modifications and if they are the real solution to the increasing number of foreclosures and unemployment. Some have compared the goals and resources of the loan modification program with bailing out water from the Titanic with a cup. It is understood that the task is so great the administration and the measures in place to control the situation will be completely overwhelmed.

The truth is that the goals the loan modification program has set itself are titanic in themselves. The administration is aiming to save three to four million homeowners from losing their homes through foreclosure. If this occurs it will be an amazing feat for many reasons. Not least is the fact that banks and mortgage servicers are not geared to modify loans. Their business up to now has been to set up the loans and collect the payments. The millions of homeowners that now seek a loan modification is challenging the banks to reinvent their work system, sometimes to their own detriment.

In order to make this possible the government has provided generous incentives to homeowners and mortgage providers. The idea is to provide bonuses and incentives to servicers and homeowners when loan modifications are made and honoured by borrowers. The loan modifications must be sustainable and fair for the homeowners to qualify. Homeowners on their part must be regular on their payments in order to qualify for the bonuses and receive the loan modification.

The sad part is that even if the government is successful in delivering the three to four million loan modifications there will still be about 4.6 million people or families that will nevertheless lose their homes by next year. This would be bring the grand total of foreclosed homes to 9 million homes by 2011.

So what can the government and homeowners do to minimize the effect of this crisis and increase the number of saved homes.

Information seems to be, as always, a key player. Many homeowners seem to let loan modifications go because they don’t understand the documents they must sign. Clear language and skilled counsel are key if this program is to have even the most modest success.

Another issue is that homeowners do not make it throught the three month trial period into the final loan modification. Of those that do, many will become delinquent later on in the loan tenure, nullifying the benefits of the loan modification with all the expense it involved.

Mortgage servicers themselves can be an obstacle. Many servicers are continuing to take foreclosure steps with homeowners that are participating in the program, undergoing the three month trial. The government is trying to motivate servicers to help homeowners to achieve the loan modification wherever this is possible.

One factor that could make the whole matter moot is the rising level of unemployment. The loan modifications the government is proposing are not designed for people who can’t afford any substantial mortgage payment due to unemployment. It is designed for homeowners that are not able to take advantage of the current lower interest rates and whose homes have dropped in value and are struggling to pay their mortgage.
If unemployment rates continue to rise the number of homeowners that don’t qualify for loan modification aid will rise increasing the number of foreclosures.

Related posts:

1. Loan Modifications No Match For Rising US Foreclosures.
2. Loan Modifications, Hope, Lies and Misinformation
3. Loan Modifications and FHA Refinance What Is The Deal

Related posts:

1. Loan Modifications No Match For Rising US Foreclosures.
2. Loan Modifications, Hope, Lies and Misinformation
3. Loan Modifications and FHA Refinance What Is The Deal

Loan Modifications are the way forward in the opinion of the Obama Administration. A number of federal programs have been placed and are ready to welcome droves of homeowners that need to modify their loans.

However many question the wisdom of loan modifications and if they are the real solution to the increasing number of foreclosures and unemployment. Some have compared the goals and resources of the loan modification program with bailing out water from the Titanic with a cup. It is understood that the task is so great the administration and the measures in place to control the situation will be completely overwhelmed.

The truth is that the goals the loan modification program has set itself are titanic in themselves. The administration is aiming to save three to four million homeowners from losing their homes through foreclosure. If this occurs it will be an amazing feat for many reasons. Not least is the fact that banks and mortgage servicers are not geared to modify loans. Their business up to now has been to set up the loans and collect the payments. The millions of homeowners that now seek a loan modification is challenging the banks to reinvent their work system, sometimes to their own detriment.

In order to make this possible the government has provided generous incentives to homeowners and mortgage providers. The idea is to provide bonuses and incentives to servicers and homeowners when loan modifications are made and honoured by borrowers. The loan modifications must be sustainable and fair for the homeowners to qualify. Homeowners on their part must be regular on their payments in order to qualify for the bonuses and receive the loan modification.

The sad part is that even if the government is successful in delivering the three to four million loan modifications there will still be about 4.6 million people or families that will nevertheless lose their homes by next year. This would be bring the grand total of foreclosed homes to 9 million homes by 2011.

So what can the government and homeowners do to minimize the effect of this crisis and increase the number of saved homes.

Information seems to be, as always, a key player. Many homeowners seem to let loan modifications go because they don’t understand the documents they must sign. Clear language and skilled counsel are key if this program is to have even the most modest success.

Another issue is that homeowners do not make it throught the three month trial period into the final loan modification. Of those that do, many will become delinquent later on in the loan tenure, nullifying the benefits of the loan modification with all the expense it involved.

Mortgage servicers themselves can be an obstacle. Many servicers are continuing to take foreclosure steps with homeowners that are participating in the program, undergoing the three month trial. The government is trying to motivate servicers to help homeowners to achieve the loan modification wherever this is possible.

One factor that could make the whole matter moot is the rising level of unemployment. The loan modifications the government is proposing are not designed for people who can’t afford any substantial mortgage payment due to unemployment. It is designed for homeowners that are not able to take advantage of the current lower interest rates and whose homes have dropped in value and are struggling to pay their mortgage.

If unemployment rates continue to rise the number of homeowners that don’t qualify for loan modification aid will rise increasing the number of foreclosures.

Related posts:

1. Loan Modifications No Match For Rising US Foreclosures.
2. Loan Modifications, Hope, Lies and Misinformation
3. Loan Modifications and FHA Refinance What Is The Deal

Related posts:

1. Loan Modifications No Match For Rising US Foreclosures.
2. Loan Modifications, Hope, Lies and Misinformation
3. Loan Modifications and FHA Refinance What Is The Deal